President Obama has put forth a wide-ranging budget proposal for the federal government's 2014 fiscal year. Included in this proposal are a number of provisions that would affect employer-provided benefits. The proposal calls for instituting an overall cap on the amount individuals may accrue under all types of retirement plans. As proposed, once an individual has benefits from all available retirement plans that in combination would be sufficient to provide an annual retirement benefit equal to the maximum benefit under a qualified defined benefit plan, no additional tax-advantaged contributions or accruals would be permitted. This proposal is expected to save $9bn over ten years.
Also of interest to employee benefit plan sponsors are provisions of the budget proposal that call for changes to PBGC premiums and the elimination of the exclusion for dividends paid on stock held by ESOPs. Other retirement-related proposals would affect IRAs, including a proposal for mandatory workplace IRAs for employers that do not sponsor another retirement plan.
One budget proposal that would affect all benefits planning is the proposal to cap the value of itemized deductions at the 28% income tax rate, and to include in those calculations contributions to retirement plans and employer-provided health care programs (both employer and employee pre-tax contributions).